third quarter, a 4% rise.

Per-share earnings of 57 cents missed analysts' consensus estimates by a penny.

Officials blamed the mediocre showing on the sale of some businesses and a falloff in revenue from mortgage banking.

"While performance in most business lines is generally on plan, several key initiatives have held down overall revenues," said David A. Daberko, chairman and chief executive officer. "Revenue growth continues to be our No. 1 challenge and priority."

National City, which is based in Cleveland and has assets of $85 billion, said it has been selling off unprofitable businesses operated by National Processing Inc., a transaction processor in which the banking company has an 88% stake. The divestitures of these fee-producing operations put a dent in noninterest income, which declined nearly 5%, to $529 million.

The company closed its acquisition of the nonagency mortgage lender First Franklin Financial Cos. in August. Nancy A. Bush, an analyst with Ryan, Beck & Co. in Livingston, N.J., said she had been told by National City's management that the First Franklin acquisition would add $10 million in revenues in the third quarter.

However, because of an unanticipated effect of purchase accounting, the additional revenues did not come through, she said.

"A lot of what we were told to expect just didn't show up," said Ms. Bush, who described the banking company's third quarter results as "puzzling."

"This has always been a high-quality company with a firm grasp on their numbers and trends," she said. "But for 1999, every quarter has entailed less revenue growth than the company has anticipated."

Analysts said National City's earnings also are feeling the after-affects of an earlier acquisition. The banking company, the nation's 10th largest, has been shrinking the real estate portfolio of First of America Bank Corp., the Kalamazoo, Mich.-based bank it bought in March 1998. This helped keep net income relatively flat for the quarter; it increased less than 2%, to $758 million.

However, there were a few bright spots in National City's earnings. For example, cost control benefited from the National Processing divestitures, said Joseph Duwan, an analyst with Keefe, Bruyette & Woods in New York. National City's efficiency ratio also improved, to 54.9% from 60.1% in the year-earlier period.

"There are some encouraging signs," Mr. Duwan said.

Shares of National City stock closed Friday at $25.5, down $1.375 or 5.1%, while the bank stock index ended the day down 24.95 points or 4.3%, to 550.19.

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